A set of pervasive trends — call them business imperatives — is coursing through the manufacturing market. Globalization, competition, price pressure and... costs — particularly those not directly related to production — continue to rise dramatically. Increasing regulations, healthcare, and legal obligations are, in many cases, offsetting hard-won, automation-enabled productivity benefits... These changes add up to an inflection point for manufacturers because they are not merely a collection of unfortunate yet temporary trends. They are profound, permanent, and industry wide. And they mean one thing: The strategies and competencies which manufacturers have relied upon won't guarantee success or even survival over the next 10 years.

With this clarion call nearly three years ago, Managing Automation launched its Progressive Manufacturing concept (see "The Rise of the Progressive Manufacturer," June 2004). For those new to Managing Automation, Progressive Manufacturing was conceived as a six-point, pro-growth agenda to help manufacturers contend with the realities of globalization, changing rules of competition, and the pervasiveness of technologies. It defines the fundamental business-technology disciplines — competencies, if you will — that manufacturers must master in order to cope with these fundamental forces as well as mounting structural cost disadvantages. Moreover, the concept calls for manufacturers to radically transform their business processes by adopting advanced technologies to interconnect often far-flung manufacturing operations and improve organizational productivity and agility.

Being progressive, MAbelieves, starts with breakthrough business models and market-changing product innovations. It then requires manufacturers to achieve excellence in supply chain management and customer interaction by continually refining and optimizing key business activities. Doing all this, of course, requires manufacturers to build a technology infrastructure that accommodates business process change by providing integrated access to all key data and applications across the extended manufacturing enterprise — including key business partners. And it means that manufacturers must invest in their people — a sorely overlooked but critical aspect of today's information economy — by providing training and education programs to help attract and retain a technically competent and productive workforce. (For full PM definitions, see the sidebar.)

But once the ink was dry on the Progressive Manufacturing concept, MArealized more could be done to help guide manufacturers forward. So, we came up with logical extensions to the PM concept that define manufacturing excellence from the inside looking out, offering even greater insights into the organizational attributes that differentiate industry leaders from laggards and winners from also-rans.

We started with the question: What separates market leaders from not-so-fast followers? The somewhat obvious response: It usually begins with strong and creative leaders — "C" level executives or empowered middle mangers — who individually or through their teams champion more innovative approaches to doing business and keep technology initiatives aligned with strategic objectives. That led us to ask: What operational attributes can help leaders advance sustainable competitive advantage? The answer: appropriate adaptation of theoretical constructs that support continuous business process improvements such as Six Sigma and lean manufacturing.

Accordingly, leadership and operational excellence have been added to Progressive Manufacturing's set of key competencies, bringing to eight the number of disciplines manufacturers must master to survive, if not thrive, in the short term and beyond.

PM supporters and advocates could argue that these additions were already covered, or implied, in the original six disciplines. They would be partly correct, of course, but our feeling was that leadership and operational excellence are so indispensable, so inextricably linked to manufacturing business success, that they require special attention to fully understand — and master.

Why Leadership Counts

Success in today's increasingly regulated, globally transparent, and social responsibility-sensitive world requires an executive leadership team that considers the big picture and connects the dots to balance today's tactical needs and projects with initiatives that are building tomorrow's strategic capabilities and products.

Written in May 2006 by Roddy Martin, vice president at AMR Research, these words get to the heart of the leadership issue. The problem, Martin says, is that despite the long-standing push to tear down departmental barriers and embrace strict business-technology alignment, most manufacturers are still organized around and measured by functional silo performance, which undercuts much-needed internal and business partner collaboration. Company leaders such as the CIO and supply chain honcho are often poles apart operationally and strategically, and are therefore powerless to catalyze change.